BENGALURU: The Indian rupee ended slightly higher on Monday after trading in a tight range throughout the session as traders waited for domestic as well as U.S. inflation readings ahead of the Federal Reserve’s monetary policy path this week.
The rupee ended at 82.43 to the U.S. dollar, compared with 82.4625 in the previous session.
“There is risk on sentiment all over,” said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors.
The direction for the USD/INR should be ideally lower, but likely buying by oil companies is preventing the move, Bhansali added.
Domestic retail inflation data is due 5.30 p.m IST.
The rupee was mostly flat through the session despite weakness in the offshore Chinese yuan, which dropped further to its lowest since November 2022.
The dollar index also inched lower by 0.2% to 103.30 ahead of key policy decisions this week from several central banks, including the Fed, which is expected to keep interest rates on hold for the first time since January 2022.
Ahead of that, traders are awaiting U.S. inflation data. Economists polled expect core consumer prices to rise 0.4% month-on-month.
“The inflation report should provide some volatility for USD but largely the focus remains on upcoming FoMC (Federal Open Market Committee),” OCBC analysts said in a note.
Futures are currently pricing in a 27% chance of a Fed rate hike in June. Soft U.S. services data and a jump in jobless claims alongside less-hawkish comments by Fed officials prior to the quiet period have prompted investors to bet on a pause.
Still, the two-year U.S. yield rose. Tracking that, the rupee forward premiums dropped with the 1-year implied yield down 3 bps at 1.74%.
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